Letter: OPERS Cost of living changes

Monday

Aug 28, 2017 at 5:22 PM

I would like to enhance the information that was given about the new review and potential changes for the cost of living adjustment that OPERS retiree’s receive each year. The article about the change was in the August 20, 2017 Columbus Dispatch. It pointed out the cost of living adjustment is a heavy burden for the retirement fund to maintain while keeping it funds solvent and in good standing. The article stated that the retiree’s get a cost of living increase of three percent or some get the increase based on the Consumer Price Index for that fiscal year up to 3%. The difference is determined when you retired. The more recent retirees are in the second category—implemented to save money. The article noted that only a few times in the last 25 years has the consumer price exceeded three percent, implying that the retirees are gaining money on their annual cost of living. What they failed to mention is the cost of living increase is based on your retirement income at the time you retired and that never changes. For example, let’s say your annual retirement benefit is $24,000.00 and you cost of living increase is based on the annual consumer price index and for the next 10 years the consumer price index averages two percent. You get no increase the first year. Two percent of 24,000 is $480.00 or $20.00 a month. At the end of 10 year your annual increase is no longer 2 percent it is 1.7 percent of your current pay because it is always based on the $24,000.00 and not the increased amount you gained over the past 10 years. The percent will continue to get smaller the longer you live. You now do not get the cost of living increase to match consumer price based on your current income. If you think this does not matter, what if your boss told you he was going to give you a 2 percent raise and base it on what you were earning in 2007. Not what you want to hear I bet.

A golden window exists in the OPERS retirement system. It is so lucrative that no one wants to consider any changes. The window is to retire and go back to work often for the state in the same job you just retired from. You now draw your retirement check and make a similar amount to your previous salary. Since we are looking for ways to save money for the retirement system, why not implement a system similar to Social Security. For example once your new income exceeds $30,000.00 in your retirement job, OPERS deducts $1.00 for every two dollars you earn. The retire rehire protocol no longer becomes so lucrative. People will stay on their jobs longer and the state will benefit from their expertise. Since people stay longer they contribute more money to OPERS retirement coffers. As we consider new ways to save money for the OPERS retirement system, it would be remiss not to evaluate how many OPERS retirees currently work and draw significant paychecks. Is OPERS supporting working retires? Should retires take a cut in their cost of living allowance to support the double dippers?

James A. Williams

Columbus

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